It sounds simple: let’s have a referral program and reward advocates to drive business our way.

So, you’ve made the decision that your business is ready to accelerate lead generation via a referral program.  You’ve determined the specific pool of advocates (customers, employees, partners, …) that you want to target as referrers.  You’ve selected a vendor to host your referral program.  Now comes the hard part – what incentives do you use to motivate your advocates?

In many ways, this is the most pivotal decision in referral program design.  From my point of view in pre-sale discussions, I look at the implications of rewards on the back-end configuration of the referral platform.  This is mainly a straightforward, mechanical decision process.  From your point of view, though, you know rewards drive referrals, but there are philosophical questions about what motivates referral behavior and what is appropriate for your referral community.  And in certain industries, such as financial services and insurance, you must consider regulatory compliance.   What are your options?  Will people refer without a reward?  Must rewards be cash?

The answers to these questions are tied to the type of product you are offering and the audience that you are asking to make referrals.  That said, the majority of the customers that we work with have opted for some sort of monetary reward, whether e-gift cards, bill or account credits, checks, or product discounts. Cash works effectively for subscription services ranging from telecommunications to mosquito control and from payroll processing to SaaS-based CRM.  These are all cash-up-front types of businesses where competitive price negotiation and price incentives are not unusual, so the notion of cash rewards dovetails nicely in these businesses.  But, there are market segments with less mercenary, more altruistic attributes that open up the discussion of alternatives.

Getting to Non-Cash Referral Rewards

One market segment where non-cash referral rewards are desirable is higher education.  University advocates (students, alumni, and employees) are motivated by their results-driven loyalty – “My life-enriching time at university”, “My secure employment”.

In this realm, we’ve started working with Northern Michigan University (NMU), a terrific public university in Michigan’s Upper Peninsula.  They are about to launch Alumni and Student referral programs.  NMU looked at the question of rewards, both philosophically and in context of a fuzzy regulatory environment that has unclear rules around rewarding for enrollment.  They took a fresh look at what the rewardable activity should be, as well as suitable rewards.   As to rewardable activity, while the utlimate goal is enrollment, NMU knows that candidates who visit the campus are very likely to enroll in the school.  So, they selected completion of a campus visit as the rewardable activity (in a similarly regulated industry, we have an insurance client who rewards when a prospect receives a quote after a referral, rather than when the prospect buys a policy).

As to the reward, NMU has been exploring a choice between non-cash and cash options for its advocates.  For Alumni, this may be a choice between campus swag (e.g. NMU jacket) and a Tango Card (electronic gift card).  For students, the choices can be more varied, starting with Tango Card on the pure cash side.  Also, on the cash side, but more focused, are an NMU bookstore gift card or dining dollars, both of which are more like credits than cash because they aim to reduce student expenses.  Another option under consideration, especially revered in a land with seven-month winters and 150 inches of annual snowfall, is a student parking pass.  While the pass technically has a cash value, it is its value as perk that provides the motivation.

Two other examples from different markets:

  1. One of our SaaS CRM customers lets their succesful advocates opt for training credits as one its reward choices.  This is akin to NMU’s bookstore gift card in that it has a cash value but its usage is focused on an essential activity rather than as a free cash giveaway.
  2. Several years ago, the Sierra Club mounted a campaign to save the endangered Florida Panther from extinction.  They leveraged our referral program to reward anyone who successfully rallied 5 people to sign their petition.  To say “thank you”, their referral reward was a premium Sierra Club duffel bag.

True Non-Cash Rewards

These examples show creativity in rewards selection, but also highlight the challenge of getting to a true non-cash incentive.  In each case, the “non-cash” rewards still have a clear cash value.

So, are there any true non-cash options?  Here are a few examples that we have discussed with our customers but have yet to see gain significant traction.

  • Thank you email – The principle behind this is that people are willing to refer as long as the process is easy.  This is appropriate for brands with high loyalty and could, in fact, be used with university alumni and with donors to non-profit organizations where the ease of referral is more important than the reward, and where it doesn’t make sense to give cash to the same people from whom you seek donations.
  • Charitable contribution
  • Advocacy round table (an advisory panel to company executives) or other company-wide recognition

Using referral rewards in higher ed

Truth be told, though, cash is king.  It may be more appropriate in less commercial environments to use merchandise, brand-specific credits, or perks but, in the end, it all has cash value.


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What is brand advocacy?